Foster v. Thornton , 131 Fla. 277 ( 1937 )

On rehearing it was made to appear that L. Elmer Thornton, on June 23, 1932, filed a tort action in the Circuit Court of Duval County, Florida, against C.E. Foster, alleging that the wife of Thornton received certain fatal injuries and from the effects thereof later died, as therein described, on account of the negligence of C.E. Foster. The suit was tried two or three times, ultimately resulting in a judgment in behalf of Thornton against C.E. Foster on August 3, 1935, for the sum of $10,670.00. After the tort action accrued and some two or three days before trial thereof in the Circuit Court of Duval County on January 30, 1933, the said C.E. Foster conveyed large holdings of real estate to his wife, Lillian M. Foster.

On August 21, 1935, I. Elmer Thornton filed a creditor's bill against C.E. Foster and wife, Lillian M. Foster, in the Circuit Court of Duval County, Florida. The bill of complaint alleged that ten pieces of real estate situated in the City of Jacksonville, Duval County, Florida, without consideration, were executed through fraud, covin, collusion and guile and conveyed for the purpose of hindering and delaying collection of the amount due on the judgment. A legal description of the ten pieces of real property is made a part of the bill of complaint, the prayer of which, among other things, is that the said conveyance,supra, transferring the ten pieces of real estate be declared null, void, and unlawful and that each of said parcels of land be subjected to the payment of the judgment of the plaintiff and that same be sold on an execution predicated on the aforesaid judgment.

On April 30, 1935, separate answers were filed on the part of C.E. Foster and wife, Lillian M. Foster, to the bill of complaint in which each of the material allegations thereof were denied, and averred, that the deed dated January 30, 1933, from C.E. Foster to his wife, Lillian M. Foster, was an honest, praiseworthy, and laudable transaction and was predicated on a lawful consideration, and that his said wife, Lillian M. Foster, had been for a number of years the equitable owner of the property prior to the date of said conveyance.

Each of the answers contained a motion on the part of defendants to dismiss the bill of complaint upon a number of grounds unnecessary to recite. Interrogatories were propounded and answers thereto filed by the defendants, and when the cause was at issue an order was entered referring it to Herbert Lamson, a member of the bar of Duval County, with instructions in the order of reference to take all testimony and report the same with findings as to law and facts. All testimony was taken by the Master, and on April 15, 1936, he made his findings as to questions of law and facts and reported the same to the Court. The Master found, among other things: (1) the equities of the cause were with the plaintiff; (2) that C.E. Foster was the owner of the lands described in plaintiff Exhibits from 2 to 11, inclusive, at the time the common law suit was filed; (3) that on October 5, 1910, Lillian M. Foster "turned over to her husband" $1405.00, and a home was bought, situated in Valdosta, Georgia, and in April, 1915, the same sold for $3,000.00, and with the additional sum of $675.00 in the form of rents likewise turned over to her husband, making a total of $3675.00, and by her husband to be invested in Jacksonville real estate, which was done, beginning with the year 1915. The money of the wife, supra, with moneys of her husband, paid for the realty conveyed to the wife on January 30, 1933.

On final hearing the Court ratified and confirmed the report of the Special Master and decreed the conveyance from C.E. Foster to his wife, Lillian M. Foster, on January 30, 1933, null, void, fraudulent, and of no effect as to the plaintiff and set the same aside and decreed the real estate therein described to be the property of C.E. Foster and subject to the writ of execution based on the judgment supra. From the final decree on behalf of plaintiff an appeal was taken and the cause is here for review on a number of assignments.

The common law action and this chancery suit have been before this court several times. This bill of complaint was filed under Section 5771 C.G.L. This Section was construed in the suit of Foster, et ux., v. Thornton, 125 Fla. 829, text 835, 170 So. 598, when Mr. Justice BUFORD, speaking for the Court, said:

"As we construe Section 3864 R.G.S., 5771 C.G.L., it must be held to apply to any sale, conveyance or transfer of any lands, tenements or hereditaments which shall have at any time after the passage of the statute be had, made or executed, contrived, or devised of fraud, covin, collusion, or guile, to the end, purpose or intent to delay, hinder or defraud creditors or others of their just and lawful actions, suits, debts, accounts, damages, demands, penalties or forfeitures and that within the terms of that statute is a conveyance made for the purpose of hindering or defrauding one who claims damages for tort or otherwise."

Counsel for appellants contends that the only question of law involved is: Where a tort feasor holds title to lands in trust for another and makes a conveyance to the cestui, the owner of the beneficial interest in the property, before the entry of judgment against him, may such conveyance be subjected to claims against the trustee? In support of the question, as propounded by counsel for appellants, is cited Glidden, Admr., v. Gutelius,96 Fla. 834, 119 So. 140; Myers, Receiver, v. Matusek, 98 Fla. 1126,125 So. 360; First Trust Savings Bk. v. Therrell, as Liquidator, 103 Fla. 1136, 138 So. 733, with many citations of authorities from other jurisdictions.

We have examined each of these authorities and are in full accord therewith. The question propounded by counsel for appellants assumes that the lands were bought with trust funds of Mrs. Lillian M. Foster when in 1910 Mrs. Foster placed $1405.00 with her husband and a home was purchased at Valdosta, Georgia. The evidence fails to disclose the amount paid for the home or whose money other than Mrs. Foster's was included therein. It is doubtful if we can assume, as has been done in the question propounded by counsel, that no money other than the wife's went into the property. It is shown that the Valdosta home was sold for $3,000.00 during the year 1915 and this money was invested in Jacksonville real estate. There should be some evidence in the record to show that this $3,000.00 was the property of Mrs. Foster. The appellants assume that the $3,000.00 was the property of Mrs. Foster about the time of the trial of the common law tort action. The burden of proof was on Mrs. Foster to prove that the consideration for the deed was bona fide and proportionate to the value of the property conveyed as expressed by this Court in Weaver-Loughridge Lbr. Co. v. Kirkland, 99 Fla. 427, text 431, 126 So. 773, when it was said:

"Where a wife permits her husband to hold the record title to her realty or permits him to use her money as his own to invest it in his own name and thereby obtain credit on the faith of his being the owner of property, she is estopped in equity to assert her title thereto as against one extending credit to the husband in reliance on such ownership. Russ v. Blackshear, 88 Fla. 573, 102 So. R. 749; Warner v. Watson, 35 Fla. 402, 17 So. R. 654. In a suit to set aside a conveyance made by a husband to his wife as fraudulent, brought by a creditor whose claim existed and was being reduced to judgment at the date of such conveyance, the burden of proving that the consideration for the conveyance was bona fide and proportionate to the value of the land conveyed is upon the wife and clearer and fuller proof is required than if the transaction had been between strangers. Southern Lbr. Sup. Co. v. Verdier, 51 Fla. 570, 40 So. 676. Hummell v. Harrington, 92 Fla. 87, 109 So. Rep. 320."

In the case of Southern Lumber Supply Co. v. Verdier, 51 Fla. 570, text 576, 40 So. 676, this Court had before it the burden and character of proof resting upon a wife when a conveyance to a wife by a husband where the husband was insolvent. There was no property appearing in the husband's name after January 30, 1933. The Court said:

"Purchasers, of real or personal property, made during coverture, by the wife of an insolvent debtor are justly regarded with suspicion and she cannot prevail in contests between his creditors and herself, involving their rights to subject property so required to the payment of his debts, unless the presumption that it was not paid for out of her separate estate be overcome by affirmative proof, and she must be held to full, clear and strict proof. Kahn v. Weinlander, 39 Fla. 210,22 South. Rep. 653. It nowhere appears from the answer whether the money which T.C. Verdier received from his wife for the real estate conveyed to her was a consideration proportionate to the value of the land conveyed. The value of the latter is not stated. In a suit to set aside a conveyance made by a husband to his wife as fraudulent, brought by his creditors whose claims existed at the date of such conveyance, the burden of proving that the consideration of the conveyance was bona fide and proportionate to the value of the land conveyed is upon the wife, and clearer and fuller proof is required than if the transaction had been between strangers. Claffin v. Ambrose, 37 Fla. 78, 19 South. Rep. 628; McTeers v. Perkins, 106 Ala. 411,17 South. Rep. 547."

See Baker Homes Co. v. Gibson, 102 Fla. 891, 136 So. 544; Kahn v. Weinlander, 39 Fla. 210, 22 So. 653.

The rule for determining the weight and sufficiency of the evidence in establishing a resulting trust has been settled in this Court for approximately fifty years. In the case of Loftin v. Sterrett, 23 Fla. 565, 2 So. 837, it was held that a resulting trust in real estate may be proved by parol testimony, but such proof must be full and clear. Likewise in the case of Geter v. Simmons, 57 Fla. 423, 49 So. 131, it was said:

"Evidence to establish a resulting trust must be so clear, strong and unequivocal as to remove from the mind of the Chancellor every reasonable doubt as to the existence of a trust."

Also in the case of Brown, et al., v. Brown, 106 Fla. 423, text p. 426, 143 So. 737, this Court said:

"When a resulting trust is sought to be established by parol evidence the burden rests upon the person asserting the existence of the trust to remove every reasonable doubt as to its existence by clear, strong and unequivocal evidence. Fox v. Kimball,92 Fla. 401, 109 Sou. Rep. 465; McGill v. Chappelle, 71 Fla. 478,71 South. Rep. 836; Semple v. Semple, 90 Fla. 7,105 South. Rep. 134; Johnson v. Sherehouse, 61 Fla. 647,54 South. Rep. 892."

Appellee at the hearing before the Master, offered in evidence a certified copy of the judgment against C.E. Foster and certified copies of the alleged fraudulent conveyances and rested his case in chief. The burden of proof was then on Mrs. Foster to show that she paid for the property described in the deed with her separate money or property, and that she paid an adequate consideration therefor, and this burden must be met by full, clear and strict proof. This rule is established by the above authorities. The appellants rest their case upon the testimony of Dr. C.E. Foster, Mrs. Lillian M. Foster and Mrs. Speight, with exhibits. The record shows that Mrs. Lillian M. Foster, in October, 1910, received from her father's estate the sum of $1405.00 which she "turned over to her husband," and the husband brought property at Valdosta, Georgia, and sold it at a profit. The ownership of that $1600.00 profit has not been established by the appellants, as required by the above authorities. We cannot, as a matter of law, assume that it was the property of Mrs. Foster but in the absence of proof must hold that it was the property of her husband, Dr. C.E. Foster. During the year 1915, with the $3,000.00, supra, Dr. Foster and wife moved to Jacksonville where he bought Jacksonville real estate with the $3,000.00 and other moneys coming into his possession, and always taking the title thereto in his own name. There is nothing in the record to show that any of Mrs. Foster's money went into the Jacksonville real estate other than the $1405.00 coming from her father's estate, but strong inferences are that Dr. Foster, with his own funds, paid for the real estate described in the bill of complaint. His statements as given in his direct testimony as to these different properties were practically destroyed on cross examination. He denied the ownership of stock in a certain corporation doing business in the City of Jacksonville; an officer thereof was called, with the records, disclosing contradictory testimony, which he later admitted when confronted with the record, but previously denied. The record here fails to show that Mrs. Lillian M. Foster met the burden of proof as required by the decisions of this Court, except the payment in October, 1910, of the sum of $1405.00 to her husband. The evidence on this point is full, clear and strict and otherwise meets the law's requirements. It would be inequitable to permit and allow her to hold several thousand dollars worth of valuable real estate when the evidence shows that she had only $1405.00 going into the property and later obtained title thereto at a time when her husband was a defendant in a common law action and the possibility of a judgment being obtained against him, and under these conditions and circumstances, when details of transaction of some twenty or more years ago were given in evidence, with some book records thereof. The record shows that Dr. Foster's money paid for the property conveyed to his wife, with the exception of $1405.00. When this sum, with interest, is returned to Mrs. Lillian M. Foster, the property described in the bill of complaint should be subject to the writ of execution. See Helland v. Evans, 113 Fla. 839, 152 So. 623.

The record shows that Dr. Foster with $1405.00 of his wife's money, in 1910 began to buy or otherwise invest in real estate. He kept the property intact and bought and sold as his judgment dictated, always taking title in his own name. She at no time required an accounting on his part — he held out to the world that he owned the property some few months prior to suit when he was negotiating a loan for $5,000.00 and agreed to pledge some of the property as security, when no complaint was made by his wife on this occasion.

Section 4 of the Declaration of Rights of the Constitution of Florida provides:

"All courts in this State shall be open, so that every person for any injury done him in his lands, goods, person or reputation shall have remedy, by due course of law, and right and justice shall be administered without sale, denial or delay."

The Courts of this State are required to see that right and justice shall prevail. Mrs. Lillian M. Foster placed with her husband the $1405.00 in the year 1910, and "if right and justice is administered" in this case, the money, with simple interest at six per cent since 1910 to the present date, should be returned to her. The property to which she now holds title should be charged with an equitable lien for said amount and the same is prior in dignity in order of payment to the judgment obtained in this case against her husband.

This Court had before it the question of an equitable lien in the case of Jones, Trustee, v. Carpenter, 90 Fla. 407, text 412-414, 106 So. 127, when it said:

"In Society of Shakers v. Watson, 68 Fed. 730, it was said that the doctrine of equitable liens is one of great importance and of wide application in administering the rights and remedies peculiar to equity jurisprudence. There is perhaps no doctrine which more strikingly shows the difference between the legal and the equitable conceptions of the juridical results which flow from the dealings of men with each other, from their express or implied undertakings. An equitable lien is not an estate or property in the thing itself nor a right to recover the thing — that is, a right which may be the basis of a possessory action; it is neither a jus ad rem nor a jus in rem. It is simply a right of a special nature over the thing, which constitutes a charge or encumbrance upon the thing, so that the very thing itself may be proceeded against in an equitable action, and either sold or sequestered under a judicial decree, and its proceeds in the one case, or its rents and profits in the other, applied upon the demand of the creditors in whose favor the lien exists. It is the very essence of this condition that while the lien continues the possession of the thing remains with the debtor or the person who holds the proprietary interest subject to the encumbrance. Pomeroy's Equity Jurisprudence, Vol 3, (4th Ed.) page 2958. * * *

"The equitable lien differs essentially from a common law lien, the latter being the mere right to retain possession of some chattel until a debt or demand due the person thus retaining it is satisfied. Possession being such a necessary element that if it is voluntarily surrendered by the creditor the lien is at once extinguished while in the former or equitable lien possession remains with the debtor or person who holds the proprietary interest. Jones on Liens (3rd ed.) Vol. 1, 26; Pomeroy's Equity Jurisprudence (4th Ed.) Vol. 3 2958; 17 R.C.L. 605.

"From the foregoing it is seen that equitable liens arise from two sources, viz.: (1) a written contract which shows an intention to charge some particular property with a debt or obligation; (2) is declared by a court of equity as applied to the relations of the parties and the circumstances of their dealings in the particular case. Jones on Liens, supra; 17 R.C.L. 605 supra; 25 Cyc. 667 * * *"

Our conclusion is that Mrs. Lillian M. Foster has an equitable lien in and to the property described in the bill of complaint for the sum of $1405.00, with interest from October 5, 1910, at the rate of six per cent per annum until paid, and the total amount due for principal and interest to January 1st, 1938, is the sum of $3702.17, and that said equitable lien is prior in dignity to the judgment lien of L. Elmer Thornton. The decree appealed from is affirmed as modified by this opinion. The original opinion held herein is modified, altered and overruled in so far as it conflicts with this said opinion, otherwise to remain the law of this case.

It is so ordered.

WHITFIELD, TERRELL and BROWN, J.J., concur.

ELLIS, C.J., and BUFORD, J., dissent.